Smart Solutions for Covering Fall College Costs

Merrill Lynch Financial Advisor Lisa James shares some tips about what families facing this challenge can do despite the limited access to student loans.

Tip 1: Don't Panic

Choices are still available for families looking for ways to supplement borrowing options.

Tip 2: Look Online

There are a few online sites such as that are quickly becoming valuable in the student loan search process. These allow borrowers to objectively research and compare loan options.

Tip 3: Consider PLUS Loans

Another option after securing all available federal student loans is PLUS loans. These are guaranteed government loans that come with favorable repayment schedules and are for parents looking to pay for a child's education.

Tip 4: Seek Out Your Local Civic Leaders

Civic leaders, such as alder people, state senators and congressmen are wonderful "connectors." Oftentimes they know individuals with endowments, and corporations and non-profit entities with funding available for students in need.

Tip 4: Contact Your College Financial Aid Office

Take advantage of the college's resources - they should provide guidance and options relevant to the particular state and school.

Tip 5: Explore Borrowing against Current Investments

IF you have equity line available to tap into, you MAY want to explore that option. However, in today's market, you need to be very careful borrowing against your home equity line or 401k.

Tip 5: Borrow Only What's Needed

Make sure you review the payment schedule; if you only need to make the first quarterly payment, don't go beyond that at this point. Grants or scholarships may come in after that, so you don't want to rack up more interest than you have to.

Tip 6: Evaluate Work Study Programs

Once the students arrive, they can begin looking at work study programs to generate income and supplement funding. Again, civic leaders can be a resource here: they are always in need of student help, so they may offer part-time work or course credits.

Tip 7: Focus on the Future

Remember, a college education is an invaluable investment in your child's future. Your children can take on loans to finance their education, but you cannot borrow for your retirement.

Finally, in looking towards next year's tuition, it's a good idea to start planning. The student can begin researching and applying for scholarships. Also, for younger children who may be attending college in the coming years, you may want to consider 529 Plan, a tax-advantaged investment vehicle in the United States designed to encourage saving for the future higher education expenses of a designated beneficiary.

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